How to Start a Small Scale Industry in India

Small Scale Industries in India

The small scale industry sector has flourished in the Indian economy over the past five decades. In India, the small scale industries accounts for about 95 percent of industrial units adds 40 percent of value addition to the manufacturing sector, nearly 80 percent of manufacturing employment and about 35 percent of exports.

Starting a small scale industry is a profitable business idea for it has certain merits for the entrepreneur as well as the economy of the nation. Despite being a labor-intensive industry, it requires less capital to start a small scale industry. Therefore, a lot of small entrepreneurs wish to start a small scale industry of their own.

For all those entrepreneurs who are thinking about starting a small scale industry, here are a few simple steps that could help them to begin with the business.

#1 Selection of Products

By conducting a market research, one could decide the product that they want to manufacture. A product that has good market potential and profitability should be the one. Consider these factors while conducting market research:

• Should have a little or no competition
• Should be innovative
• Easy availability of raw materials
• Government Policies regarding the product type should be clear/all right
• Should be easily accessible to the market
• Should be within your budget

#2 Location of Enterprise

While deciding on the location of the industry, availability of raw material, transportation costs and availability of land at cheaper rates are the most crucial points to be remembered (along with some more factors). In India, government also offers a relevant industrial estate with pre-built factory sheds/developed plots in order to make a room for integrated development of small scale industries.

#3 Deciding the Organization Pattern

There are three main forms of ownership that small scale industry owners operate on: Proprietary, Partnership, and Company.

Proprietary describes all the rights that are the owner of property can exercise and all items manufactured and marketed under exclusive rights.

Partnership is an association of two or more businesspeople. Both partners invest their money in a partnership and carry on the business as joint ventures where they share all their profits, losses, risks and combine their capital and managerial skills for mutual benefit.

Company is a legal entity created by the state whose assets and liabilities are separate from its owners.

You could decide on which ownership form your business is going to operate.

#4 Project Appraisal

Project appraisal means the analysis of a scheme or project that has to be prepared keeping in mind the economic, financial, technical, market and managerial aspects to arrive at the most socially-feasible enterprise. It enables an entrepreneur to assess inputs required to assimilate in the future activities of the firm.

#5 Registration with the Authorities

After finalizing the above steps, it’s time to get the small scale industry registered with authorities like State Directorate of India, DGS&D, RBI, RLA, etc to get your industry recognized by the government.